Final Word from Thursday, January 9, 2014

If we accept the premise of CNB Vice Gov. Vladimír Tomšík that there is only one kind of deflation, and that it is bad, we must curse the 19% drop last year in the average mobile-phone calling rate. We must beg the ČTÚ telecoms regulator to revert to its old criminal ways of protecting the incumbent operators. We must vilify Google for introducing an operating system, Android, that lowered the costs of tablets and smartphones. We must damn the very existence of Air Bank and other low-cost financial institutions. We must abhor the shale boom in the U.S. for allowing us to pay less for energy. By arguing that there is only one kind of deflation, the CNB can conveniently ignore any analysis of how much of the drop in prices is the result of technology, increased competition and the elimination of criminal cartels. Only such an analysis can answer the question of whether the CNB acted in the nick of time to prevent bad deflation, or whether it acted instead at the last possible moment before such a move would have become utterly indefensible. [Czech Republic Czech National Bank devaluation intervention inflation gas oil]

Glossary of difficult words

to revert - to return to (a previous state, condition or practice);

incumbent - current, present (as opposed to a fourth mobile operator or virtual operators);

to vilify - to speak or write about in an abusively negative way;

to abhor - to regard with disgust and hatred;

indefensible - not justifiable by argument.

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